Company registration number 05662598 (England and Wales)
HERBERT SYSTEMS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
HERBERT SYSTEMS LIMITED
COMPANY INFORMATION
Directors
A L Mixer
K B Kent
P Diamond
(Appointed 14 April 2023)
Secretary
Gravitas Company Secretarial Services Limited
Company number
05662598
Registered office
One New Change
London
EC4M 9AF
Auditor
Mercer & Hole LLP
72 London Road
St Albans
Hertfordshire
AL1 1NS
HERBERT SYSTEMS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Notes to the financial statements
12 - 21
HERBERT SYSTEMS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Performance for the year
The directors consider that the results for the year are as expected.
The company remains dependent on the financial support of other group companies and the directors have received assurances that this support will continue for the foreseeable future.
Strategic objectives
The company's objective is to achieve growth resulting from the increased sales of the products over which it earns a licence fee.
The key elements to the company's growth strategy are:
Product development
The company will continue to develop its products to meet the changing requirements of tray return systems, with innovative design and software development.
Market expansion
The company has licensed the manufacture, distribution and sales of its products to another group company, Rapiscan Systems Ltd, which can make use of its already extensive global network of distributors, and established manufacturing capacity to meet the demand for the company's products.
Future outlook
The company believes that a return to normal levels of international travel should help the company achieve its strategy.
Principal risks and uncertainties
Distribution
The company is dependent on Rapiscan Systems Limited's ability to manage its distributors effectively in order for the company's products to be sold worldwide.
Financial risk management
From the perspective of the company, the financial risks and uncertainties are integrated with those of the OSI Systems Inc. group to which it belongs and are not managed separately. Accordingly, the principal financial risks and uncertainties of OSI Systems Inc., are discussed on pages 17-31 Part I, Item 1A "Risk Factors" of the 2023 Form 10-K published on 24 August 2023 which does not form part of this report.
Whilst some of the risks do not affect the company directly, the company is dependent on the group as its source of financing, and therefore these risks could have an effect on the company.
The company's operations expose it to a variety of financial risks that include the effects of changes in credit risk and liquidity risk.
Credit risk
Financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents. The company restricts investments in cash equivalents to financial institutions with high credit standing.
Liquidity risk
The company's liquidity is dependent upon the group's ability to provide the necessary funds. The company maintains sufficient funds for its operations, and has support available from other group companies should this become necessary.
HERBERT SYSTEMS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Foreign currency risk
The company receives all of its income in US dollars. The exchange risk is managed by matching receivables with payables as the bulk of the purchases are also US dollar based. The company's exposure to exchange rate fluctuations is managed as part of OSI Systems Inc. group's overall policy on foreign currency.
K B Kent
Director
14 February 2024
HERBERT SYSTEMS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
During the year the principal activity of the company continued to be that of the manufacture of electronic equipment and systems.This was carried out, on the company's behalf, by Rapiscan Systems Ltd and the company receives a percentage of that company's sales under a licence agreement.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A L Mixer
P D Lattin
(Resigned 14 April 2023)
K B Kent
P Diamond
(Appointed 14 April 2023)
Post reporting date events
There are no post balance sheet events to report.
Going concern
The directors believe that the company is well placed to manage its financial risks successfully and have reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future, Consequently, it continues to adopt the going concern basis of accounting in preparing the annual financial statements.
At the balance sheet date the company had a working capital deficit of $5,116,266 by virtue of its current liabilities exceeding its current assets. Fellow group undertaking, Rapiscan Systems Limited, who were owed $5,143,102 by the company at the balance sheet date have confirmed that although the balance remains payable on demand they will only require repayment at such time as the company has sufficient resources to do so, but it would not impact the company's ability to meet its other financial liabilities as they fall due.
The company leverages its intellectual property through a licence agreement with a fellow group undertaking. The directors have prepared forecasts through to December 2024 based on experience to date and orders.
The directors have received assurances of continued support from the company's ultimate parent undertaking, OSI Systems. The directors are therefore confident that the going concern basis is appropriate for the preparation of these financial statements.
Auditor
The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
HERBERT SYSTEMS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
K B Kent
Director
14 February 2024
HERBERT SYSTEMS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 5 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
HERBERT SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF HERBERT SYSTEMS LIMITED
- 6 -
Opinion
We have audited the financial statements of Herbert Systems Limited (the 'company') for the year ended 30 June 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to note 1.2 in the financial statements, which indicates that the company's current liabilities exceeded its current assets by $5,117,973. As stated in note 1.2, these conditions indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
HERBERT SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HERBERT SYSTEMS LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the company and the industry, we identified that there were no specific laws or regulations that were critical to the operation of the business. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principle risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure, and management bias in accounting estimates.
Audit procedures performed by the engagement team included:
discussions with management, including considerations of known or suspected instances of non-compliance with laws and regulations and fraud;
evaluation of the operating effectiveness of management's controls designed to prevent and detect irregularities;
challenging assumptions and judgements made by management in its significant accounting estimates;
identifying and testing journal entries.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
HERBERT SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HERBERT SYSTEMS LIMITED
- 8 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Ross Lane
Senior Statutory Auditor
For and on behalf of Mercer & Hole LLP
15 February 2024
Chartered Accountants
Statutory Auditor
72 London Road
St Albans
Hertfordshire
AL1 1NS
HERBERT SYSTEMS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
2023
2022
Notes
$
$
Revenue
3
136,233
115,437
Administrative expenses
(98,193)
(149,537)
Other operating income
6,833
18,268
Profit/(loss) before taxation
44,873
(15,832)
Tax on profit/(loss)
6
(7,979)
(2,855)
Profit/(loss) for the financial year
36,894
(18,687)
The income statement has been prepared on the basis that all operations are continuing operations.
HERBERT SYSTEMS LIMITED
STATEMENT OF FINANCIAL POSITION
- 10 -
2023
2022
Notes
$
$
$
$
Non-current assets
Property, plant and equipment
8
2,013
Current assets
Trade and other receivables
9
47,111
56,860
Current liabilities
10
(5,163,377)
(5,212,033)
Net current liabilities
(5,116,266)
(5,155,173)
Net liabilities
(5,116,266)
(5,153,160)
Equity
Called up share capital
13
39,638
39,638
Other reserves
14
26,429
26,429
Retained earnings
14
(5,182,333)
(5,219,227)
Total equity
(5,116,266)
(5,153,160)
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 14 February 2024 and are signed on its behalf by:
K B Kent
Director
Company registration number 05662598 (England and Wales)
HERBERT SYSTEMS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
Share capital
Currency translation reserve
Retained earnings
Total
$
$
$
$
Balance at 1 July 2021
39,638
26,429
(5,200,540)
(5,134,473)
Year ended 30 June 2022:
Loss and total comprehensive income
-
-
(18,687)
(18,687)
Balance at 30 June 2022
39,638
26,429
(5,219,227)
(5,153,160)
Year ended 30 June 2023:
Profit and total comprehensive income
-
-
36,894
36,894
Balance at 30 June 2023
39,638
26,429
(5,182,333)
(5,116,266)
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
1
Accounting policies
Company information
Herbert Systems Limited is a private company limited by shares incorporated in England and Wales. The registered office is One New Change, London, EC4M 9AF.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in US Dollars, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of OSI Systems Inc.These consolidated financial statements are available from its registered office, 12525 Chadron Avenue, Hawthorne, CA 90250, USA.
1.2
Going concern
The directors believe that the company is well placed to manage its financial risks successfully and have reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future, Consequently, it continues to adopt the going concern basis of accounting in preparing the annual financial statements.
At the balance sheet date the company had a working capital deficit of $5,116,266 by virtue of its current liabilities exceeding its current assets. Fellow group undertaking, Rapiscan Systems Limited, who were owed $5,143,102 by the company at the balance sheet date have confirmed that although the balance remains payable on demand they will only require repayment at such time as the company has sufficient resources to do so, but it would not impact the company's ability to meet its other financial liabilities as they fall due.
The company leverages its intellectual property through a licence agreement with a fellow group undertaking. The directors have prepared forecasts through to December 2024 based on experience to date and orders.
The directors have received assurances of continued support from the company's ultimate parent undertaking, OSI Systems. The directors are therefore confident that the going concern basis is appropriate for the preparation of these financial statements.
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
1.3
Revenue
Turnover is recognised at the fair value of the consideration received from the licence fee agreement.
Revenue from licence fees are recognised after Rapiscan Systems Ltd has invoiced for the sale.
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Acquired technology & software
4 & 7 years straightline
1.5
Property, plant and equipment
Tangible fixed assets are initially measured at cost and subsequently measured at cost net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Computers
25% on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Impairment of non-current assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Revenue
2023
2022
$
$
Revenue analysed by class of business
Licence fee income
136,233
115,437
2023
2022
$
$
Revenue analysed by geographical market
United Kingdom
136,233
115,437
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
3
Revenue
(Continued)
- 17 -
2023
2022
$
$
Other revenue
Grants received
6,833
18,268
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
$
$
Exchange losses
1,689
961
Government grants
(6,833)
(18,268)
Fees payable to the company's auditor for the audit of the company's financial statements
16,608
13,400
Depreciation of owned property, plant and equipment
2,013
9,068
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Full-time
1
1
Directors
3
3
Total
4
4
Their aggregate remuneration comprised:
2023
2022
$
$
Wages and salaries
54,749
92,391
Social security costs
6,436
11,690
Pension costs
2,112
3,949
63,297
108,030
The directors are remunerated by other group entities.
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
6
Taxation
2023
2022
$
$
Current tax
UK corporation tax on profits for the current period
7,986
Adjustments in respect of prior periods
(2,314)
6,420
Group tax relief
(3,200)
Total current tax
5,672
3,220
Deferred tax
Origination and reversal of timing differences
2,307
(365)
Total tax charge
7,979
2,855
An increase in the UK corporation tax rate from 19% to 25% (effective from 1 April 2023) was substantively enacted on 10 June 2021.The increase in the rate will apply to companies with profits over £250k. Also announced in the Budget on 3 March 2021 was the introduction of small profits rate of 19% to apply to profits under £50k with a tapered rate to apply on profits above this threshold but under £250k.
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
$
$
Profit/(loss) before taxation
44,873
(15,832)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
9,199
(3,008)
Adjustments in respect of prior years
(2,314)
6,420
Effect of change in corporation tax rate
291
(88)
Research and development tax credit
115
(469)
Deferred tax adjustments in respect of prior years
688
Taxation charge for the year
7,979
2,855
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
7
Intangible fixed assets
Acquired technology & software
$
Cost
At 1 July 2022 and 30 June 2023
818,689
Amortisation and impairment
At 1 July 2022 and 30 June 2023
818,689
Carrying amount
At 30 June 2023
At 30 June 2022
8
Property, plant and equipment
Computers
$
Cost
At 1 July 2022 and 30 June 2023
38,326
Depreciation and impairment
At 1 July 2022
36,313
Depreciation charged in the year
2,013
At 30 June 2023
38,326
Carrying amount
At 30 June 2023
At 30 June 2022
2,013
9
Trade and other receivables
2023
2022
Amounts falling due within one year:
$
$
Corporation tax recoverable
37,439
44,881
Deferred tax asset (note 11)
9,672
11,979
47,111
56,860
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
10
Current liabilities
2023
2022
$
$
Amounts owed to group undertakings
5,143,102
5,188,933
Accruals and deferred income
20,275
23,100
5,163,377
5,212,033
11
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
$
$
Accelerated capital allowances
9,672
11,979
2023
Movements in the year:
$
Asset at 1 July 2022
(11,979)
Charge to profit or loss
2,307
Asset at 30 June 2023
(9,672)
The deferred tax asset set out above is not expected to reverse within 12 months.
12
Retirement benefit schemes
2023
2022
Defined contribution schemes
$
$
Charge to profit or loss in respect of defined contribution schemes
2,112
3,949
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
13
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
$
$
Issued and fully paid
Ordinary shares of £1 each
30,000
30,000
39,638
39,638
HERBERT SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
14
Reserves
Currency translation reserve
This represents foreign currency differences arising on the change in functional currency from GBP to USD on 30 June 2019.
15
Events after the reporting date
There are no reportable post balance sheet events.
16
Ultimate controlling party
Herbert Systems Limited is a wholly owned subsidiary of OSI (Holdings) Company Ltd , a company registered in | England and Wales.OSI (Holding)Company Ltd is a subsidiary undertaking of OSI Systems Inc, a company | registered in the State of California,USA. The directors consider OSI Systems Inc, to be the controlling | | ultimate parent company and a copy of this company's accounts can be obtained from 12525 Chadron | | | Chadron Avenue ,Hawthorne,CA 90250,USA. | | | | | | |
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